lee barken - accounting day 2012 - crowdfunding€¦ · 5/9/2012 1 accounting day, may 7th 2012 lee...
TRANSCRIPT
![Page 1: Lee Barken - Accounting Day 2012 - CrowdFunding€¦ · 5/9/2012 1 Accounting Day, May 7th 2012 Lee Barken, CPA, LEED-AP Energy and CleanTECH Practice Leader Haskell & White, LLP](https://reader033.vdocuments.us/reader033/viewer/2022060402/5f0e52fd7e708231d43eb0ae/html5/thumbnails/1.jpg)
5/9/2012
1
Accounting Day, May 7th 2012
Lee Barken, CPA, LEED-APEnergy and CleanTECH Practice LeaderHaskell & White, [email protected], 858-350-4215
CrowdFunding: New ways to raise capital
What is CrowdFunding?
• Collective Action
What is CrowdFunding?
• Collective Action
What is CrowdFunding?
• Collective Action
What is CrowdFunding?
• Collective Action
What is CrowdFunding?
• Collective Action
![Page 2: Lee Barken - Accounting Day 2012 - CrowdFunding€¦ · 5/9/2012 1 Accounting Day, May 7th 2012 Lee Barken, CPA, LEED-AP Energy and CleanTECH Practice Leader Haskell & White, LLP](https://reader033.vdocuments.us/reader033/viewer/2022060402/5f0e52fd7e708231d43eb0ae/html5/thumbnails/2.jpg)
5/9/2012
2
What is CrowdFunding? What is CrowdFunding?
• Collective Action + Fundraising
What is CrowdFunding?
• Donation– Gift
– Prize/Rewards
– Product Pre-Orders
• Investment– Debt
– Equity
What is CrowdFunding?
• Collective Action + Fundraising
What is CrowdFunding?Donation/Gift
http://www.indiegogo.com/Jeffery-Self-Needs-A-New-Tooth
What is CrowdFunding?Prize/Rewards
http://www.kickstarter.com/projects/dinakantor/treece
![Page 3: Lee Barken - Accounting Day 2012 - CrowdFunding€¦ · 5/9/2012 1 Accounting Day, May 7th 2012 Lee Barken, CPA, LEED-AP Energy and CleanTECH Practice Leader Haskell & White, LLP](https://reader033.vdocuments.us/reader033/viewer/2022060402/5f0e52fd7e708231d43eb0ae/html5/thumbnails/3.jpg)
5/9/2012
3
CrowdFundingProduct Pre-orders
• Pebble Watchhttp://www.kickstarter.com/projects/597507018/pebble-e-paper-watch-for-iphone-and-android
CrowdFundingPre-orders
• Pebble Watchhttp://www.kickstarter.com/projects/597507018/pebble-e-paper-watch-for-iphone-and-android
What is CrowdFunding?
• Donation– Gift
– Prize/Rewards
– Product Pre-Orders
• Investment– Debt
– Equity
What is CrowdFunding?
• Collective Action + Fundraising
What is CrowdFunding?
• Collective Action + Fundraising
Peer to Peer Lending
![Page 4: Lee Barken - Accounting Day 2012 - CrowdFunding€¦ · 5/9/2012 1 Accounting Day, May 7th 2012 Lee Barken, CPA, LEED-AP Energy and CleanTECH Practice Leader Haskell & White, LLP](https://reader033.vdocuments.us/reader033/viewer/2022060402/5f0e52fd7e708231d43eb0ae/html5/thumbnails/4.jpg)
5/9/2012
4
CrowdFundingDownsides
• Transactional overhead• Large group of unsophisticated investors
– Future M&A/investment
– Investor relations
• Fraud• Failure to Launch
CrowdFundingDownsides
• Transactional overhead• Large group of unsophisticated investors
– Future M&A/investment
– Investor relations
• Fraud• Failure to Launch
CrowdFundingDownsides
• Transactional overhead• Large group of unsophisticated investors
– Future M&A/investment
– Investor relations
• Fraud• Failure to Launch
CrowdFundingDownsides
• Transactional overhead• Large group of unsophisticated investors
– Future M&A/investment
– Investor relations
• Fraud• Failure to Launch
Fraud
• Tech-Sync Power Systemhttp://www.kickstarter.com/projects/606787527/the-tech-sync-power-system
CrowdFundingDownsides
• Transactional overhead• Large group of unsophisticated investors
– Future M&A/investment
– Investor relations
• Fraud• Failure to Launch
![Page 5: Lee Barken - Accounting Day 2012 - CrowdFunding€¦ · 5/9/2012 1 Accounting Day, May 7th 2012 Lee Barken, CPA, LEED-AP Energy and CleanTECH Practice Leader Haskell & White, LLP](https://reader033.vdocuments.us/reader033/viewer/2022060402/5f0e52fd7e708231d43eb0ae/html5/thumbnails/5.jpg)
5/9/2012
5
CrowdFundingPre-orders
• TouchFire Keyboardhttp://www.kickstarter.com/projects/740785012/touchfire-the-screen-top-keyboard-for-ipad
JOBS ActHR3606
• TITLE I--REOPENING AMERICAN CAPITAL MARKETS TO EMERGING GROWTH COMPANIES
• TITLE II--ACCESS TO CAPITAL FOR JOB CREATORS• TITLE III--CROWDFUNDING• TITLE IV--SMALL COMPANY CAPITAL FORMATION• TITLE V--PRIVATE COMPANY FLEXIBILITY AND
GROWTH• TITLE VI--CAPITAL EXPANSION• TITLE VII--OUTREACH ON CHANGES TO THE LAW
CrowdFunding
• Public Solicitation / Pre-existing Relationship
CrowdFundingAngel Investing for the 99%?
• Accredited vs. Unaccredited
CrowdFundingAngel Investing for the 99%?
• Accredited Investor– Earn $200k ($300k married couples)
– Or net worth of >$1M (excluding residence)
• 1982 = 1.6%
JOBS ActIssuers
• Up to $1,000,000 per 12 months• Offering conducted through “funding portal”• Background check• 21 day “review period”
• 100% of target must be reached• Significant disclosures (personal liability if
incomplete)
![Page 6: Lee Barken - Accounting Day 2012 - CrowdFunding€¦ · 5/9/2012 1 Accounting Day, May 7th 2012 Lee Barken, CPA, LEED-AP Energy and CleanTECH Practice Leader Haskell & White, LLP](https://reader033.vdocuments.us/reader033/viewer/2022060402/5f0e52fd7e708231d43eb0ae/html5/thumbnails/6.jpg)
5/9/2012
6
JOBS ActIssuers
• A New Law is an Auditor’s Best Friend (??)
JOBS ActIssuers
• $100k or less – self certification• >$100k - $500k – review• >$500k - $1M – audit
JOBS ActInvestors
• Limits based on net income or net assets– Under $40k = $2,000/year
– $40k-99k = 5%
– $100k+ = 10%
• Limits are in aggregate (not per project)• Restricted for 1 year (except to accredited)
JOBS ActFunding Portal
• Must be a broker/dealer or register w/SEC• Must register w/SRO (FINRA or ?)• Disclosures and investor education• No finders fees allowed to find investors
• No financial interest in issuer• Cannot offer investment advice
SEC270 Days
“Meet such other requirements as theCommission may prescribe” = TBD
JOBS ActHR3606
• TITLE I--REOPENING AMERICAN CAPITAL MARKETS TO EMERGING GROWTH COMPANIES
• TITLE II--ACCESS TO CAPITAL FOR JOB CREATORS• TITLE III--CROWDFUNDING• TITLE IV--SMALL COMPANY CAPITAL FORMATION• TITLE V--PRIVATE COMPANY FLEXIBILITY AND
GROWTH• TITLE VI--CAPITAL EXPANSION• TITLE VII--OUTREACH ON CHANGES TO THE LAW
![Page 7: Lee Barken - Accounting Day 2012 - CrowdFunding€¦ · 5/9/2012 1 Accounting Day, May 7th 2012 Lee Barken, CPA, LEED-AP Energy and CleanTECH Practice Leader Haskell & White, LLP](https://reader033.vdocuments.us/reader033/viewer/2022060402/5f0e52fd7e708231d43eb0ae/html5/thumbnails/7.jpg)
5/9/2012
7
Reg D, Section 506
• General Solicitation OK• No Unaccredited Investors
Groups Forming
• SRO: The CrowdFund Intermediary Regulatory Association (CFIRA)http://www.cfira.org
• Trade Organization: The National CrowdFunding Association http://www.nlcfa.org
Questions
• Is the “startup industry” the next boom or the next bubble?
– Will investors act intelligently?– Will issuers act ethically?
CrowdFunding
“Nobody makes a greater mistake than hewho does nothing because he could only doa little.”
- Edmund Burke, 1729-1797
Accounting Day, May 7th 2012
Lee Barken, CPA, LEED-APEnergy and CleanTECH Practice LeaderHaskell & White, [email protected], 858-350-4215
CrowdFunding: New ways to raise capital